This speech was delivered by BCA Chief Executive Jennifer Westacott at the launch of the Mitchell Institute's issues paper 'Financing tertiary education in Australia – the reform imperative and rethinking student entitlements' in Melbourne on 25 February 2015.

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Introduction

Thank you Mark, and thanks to Mitchell Institute for inviting me to be part of today’s launch.

This issues paper is a very thoughtful contribution to a very important issue.

I’ve been asked to provide some comment on the issues covered in the paper and I’m going to divide this into three broad themes.

First, I want to speak to the paper’s overarching message about the importance of tertiary education, and the kind of model that’s required.

Then I’ll canvass the central thesis around entitlement, and I’ll finish by saying something about funding.

The importance of tertiary education

The Business Council of Australia has always taken an interest in education - clearly, our member companies rely on having a pipeline of skilled and qualified people.

But the role of education in national prosperity is, of course, far deeper than that.

When education runs across a society, that society is healthier, more cohesive and more harmonious.

The issues paper we are launching here today is concerned with the particular benefits accrued to society through tertiary education.

The paper rightly identifies that workplaces of the future will demand different and higher level skills.

We are moving from an environment characterised by qualifications, awards and jobs to an environment characterised by skills, capabilities and tasks.

And they will be as tradable as commodities, services and products.

We are moving to a world where the capacity of individuals to create and innovate will be the difference between success and failure – for companies, for governments and for the individuals themselves.

How we educate, train and retrain is going to be the absolute game changer in keeping countries, and the people within them productive, competitive and prosperous.

A post-school qualification is already becoming a baseline requirement for economic and social participation.

More people are enrolled in VET and higher education than ever before, and governments are agreed on the need to increase our national skill levels.

Over the course of a generation, we have shifted from having a tertiary education system servicing 30 per cent of the population to one that needs to service the majority.

A different tertiary model

This means that a system that was once highly targeted needs to adapt to become a mass tertiary education system.

It means that the boundaries between VET and higher education are increasingly blurred as people source different types of education, training and retraining throughout their lives.

This blurring of boundaries is a good thing. But coupled with the growth of the sector, it has fundamental implications for the system’s funding parameters and the funding model itself.

Entitlement model

For all these reasons, it’s very timely to have this issues paper - covering both VET and higher education – which focuses our attention on a tertiary entitlement.

A tertiary entitlement puts clients at the centre of the system because the funding follows the student.

This means understanding and responding to their diverse skilling needs and circumstances.

The issues paper highlights the unequal treatment of VET and higher education students in the current entitlement arrangements.

A single entitlement model both reflects the equal importance of these two steams, and provides a policy lever to make them operate more consistently and become more integrated.

Because the reality, as the paper recognises, is that VET and higher education sectors serve different but equally vital functions.

Funding models, rules governing access to qualifications, and student support entitlements have to align.

The Business Council believes we need an entitlement model that allows people to train, retrain or up skill over their lifetime without having to leave the labour market.

We have advocated for a tertiary education model that meets the needs of the 21st century by including an entitlement to government support for up skilling as its centrepiece.

This means it should not be limited to young people. There are more than 1.6 million people in the 30 - mid 40s age bracket who have no post-school qualification.

This group of people have many working years ahead of them and should not be overlooked when we talk about the value of tertiary education.

Such a model would:

• Deliver high-quality skills development to people across all stages of their lives.

• Give people an entitlement to a level of government support, be it in VET or higher education, and ensure that both sectors have equal status.

• Ask people to make a personal contribution to their education that can be deferred through an income contingent loan.

• Give students the choice about what they study and where.

• Have strong enforcement of well thought-through national standards, informed by industry, to ensure  high-quality delivery by both public and private providers.

Our model would also halt the disintegration of TAFE.

TAFEs must compete with private providers, and need to be equipped to do so.

But let’s be very clear. TAFEs have an important role to play in a tertiary sector and they cannot be allowed to wither on the vine.

Funding tertiary education

So let me finish with the issue of funding.

I think what we all want is a system where the pathways are there for people to move seamlessly across different parts of an integrated tertiary education system.

That is not the world we’re in right in right now.

The funding parameters have to change.

The issues paper proposes a framework for the entitlement that splits VET funding between the Commonwealth and states and territories according to the level of qualification the student is undertaking.

The Business Council has more work to do around how tertiary education funding should be designed in the context of the Federation White Paper.

We believe that the costs of expanding access to VET and higher education should be shared by governments and learners because tertiary education creates public and private benefit.

In our view students should make a personal contribution to their education based on their future earning capacity.

This already happens for higher education through the Commonwealth’s income contingent loans system – which only some VET students can access.

The reality is that many people using the VET system will have a strong earning potential. Given the high return on investment they receive from their VET qualification, it makes sense that they should contribute to the cost of their training.

Introducing a tertiary entitlement asks governments to front-end load their investment in human capital during a time of increasing pressure on the budget.

While this is a logical approach, it would have to be designed and staged in a way that is realistic from a fiscal position.

But there is no doubt that increasing the number of Australians with a post-school qualification will have substantial and lasting impacts on workforce participation and will reduce people’s future reliance on government support.

Improving workforce participation rates is also one of the most powerful ways we can offset the impact of our ageing population.

Conclusion

These are issues of great import to Australia.

It’s a credit to Mitchell Institute and to Peter and Sarah that they have prepared this paper, and invited a response from someone like me who represents the business sector.

It is only by sharing our ideas and perspectives, and inviting them to be contested, that we can make the right decisions as a country.

I can assure you that our current President Catherine Livingstone and I will ensure that the Business Council maintains a strong focus on expanding access to VET and higher education, and improving the robustness and sustainability of both sectors.

Thank you.